Trump Sells Himself Outside the U.S.

By

Robbie Whelan

Updated June 18, 2013 8:32 p.m. ET

Donald Trump
,
who first found fame as a real-estate developer, has put his name on mens' fragrance, mattresses and neckties in recent years. But there is one type of product he hasn't licensed his name to since the beginning of the financial downturn: a U.S. building.

The last time Mr. Trump signed a deal licensing his name to a U.S. real-estate project was in 2007, when he agreed to put it on the Trump Soho, a hotel-condo project in downtown Manhattan. He also sold his name to a golf resort in Puerto Rico in 2008.

Donald Trump's name is everywhere — but not on a major real-estate project in the U.S. since 2008. Mr. Trump says he invests only in projects that he really believes in, licensing the use of his name to more than a dozen real-estate developers world-wide. Robbie Whelan reports. Photo: AP.

ENLARGE

Real-estate developer Donald Trump spoke at the opening of the Trump Towers Mall in Istanbul in 2012.
Reuters

It isn't that Mr. Trump has lost his taste for seeing his name stamped in capital letters on other developers' undertakings. He is just doing it overseas instead. In recent years, Mr. Trump has licensed his name to more than a dozen real-estate developers in Turkey, the Caucasus, Brazil and other corners of the globe.

On Wednesday, Mr. Trump is expected to unveil plans for a Trump-branded hotel and condominium tower in downtown Vancouver, British Columbia, according to executives familiar with the project.

Plans for Trump-branded condominiums, resorts and commercial centers also are under way in the Philippines and Azerbaijan. In March, Trump Organization opened an office in Shanghai to identify Chinese branding deals for the company.

Mr. Trump, 67 years old, says he is focusing his licensing business on projects in other countries because he is less familiar with those real-estate markets.

Exploring the Enterprises of Donald Trump

Photos

Robbie Antonio, scion of one of the Philippines most prominent real estate families, pitched The Donald on the Trump Tower Manila after meeting his daughter, Ivanka (pictured) at social events. AFP/Getty Images

In the U.S., he says he would rather invest his money to acquire and develop his own properties—and put his name on those.

Some branding experts suggest Mr. Trump's U.S. hiatus stems at least in part from the patchy record of his previous licensing deals there. Some of those projects ended up in foreclosure or never were completed, prompting lawsuits involving hundreds of condo buyers against the developers, Mr. Trump, or both.

The lull in Mr. Trump's U.S. property-branding deals underscores a feature of his business empire, which includes the TV show "The Apprentice," golf courses and real estate throughout the world, in addition to his licensing business. It is built in large part on Mr. Trump's outsize persona.

"It's not even a question of ego. It's just that my name makes everything more successful," Mr. Trump said in a phone interview from his office in Trump Tower, a 68-story skyscraper he developed on Manhattan's Fifth Avenue in the early 1980s.

In his typical real-estate licensing deals, he sells developers the right to use his name for an upfront fee of between $5 million and $10 million, according to a person familiar with Mr. Trump's business dealings. He also gets a portion of potential future sales, or in the case of hotels, a management contract.

Over the years, Mr. Trump also has sold his brand for use on steaks, bottled water, flavored vodka, scotch and cuff links.

Branding experts point out that the success of Mr. Trump's brand depends on his image as an ultrawealthy businessman with the Midas touch.

"Each time that there's a default or a bankruptcy, it chips away at the value of the Trump name," says
James Fox,
chief executive of Red Peak Branding, a firm that does brand-strategy work for large firms such as
Intel
Corp.
and
American Express
Co.

Trump-branded projects ran into financial problems during the downturn in cities including Tampa and Fort Lauderdale, Fla., and New York. More recently, in January, a real-estate firm that owned the land that was slated to be the Trump Towers Philadelphia condo complex, filed for Chapter 11 bankruptcy protection, with a plan to restructure and restart the project

The Trump name also was associated with problems in Atlantic City, N.J., where Trump-branded casinos have filed for bankruptcy protection three times.

The Marketing Arm, an
Omnicom Group
Inc.
unit that tracks celebrity appeal by using online consumer polls, says that in 2008, Mr. Trump was No. 154 on a list of 3,000 celebrities ranked in order of how effective they were as product endorsers. That was on par with actors George Clooney and Clint Eastwood. Today, consumers rate him at No. 2,763, or about as effective at selling products as pop star Britney Spears and reality-TV personality Kelly Osbourne, the company says.

In 2008, Mr. Trump hired
Jonathan Low,
a partner with Predictiv Consulting, a branding firm, to assess the value of the Trump name. Back then, he said it was worth between $2.8 billion and $3.4 billion. Mr. Low said that he hasn't compiled any data on the Trump brand since 2008, but he said Tuesday that the value of the brand "probably hasn't diminished and it may have increased."

Mr. Trump blames the financial problems that hit Trump-branded projects on the financial downturn and on the developers, and he denies they have hurt his brand in the U.S.

He points out that he made money on the branding deals even if the projects ran into trouble.

Mr. Trump says these days, when he wants to do a domestic real-estate deal, he will invest in it rather than simply doing a branding arrangement.

His recent U.S. projects include the Trump National Doral, which is a Miami golf resort that he bought out of bankruptcy, and the conversion of the Old Post Office building in Washington into a 260-room luxury hotel.

Mr. Trump began doing licensing deals in the early 2000s, as he was bouncing back from the near-collapse of his real-estate empire about a decade earlier. Mr. Trump says the strategy sheltered him from financial risk while giving him the ability to assure quality control.

According to several of his partners, Mr. Trump provides every developer he works with a manual that outlines building features—including ceiling heights of at least 9 feet, dark glass curtain-wall exteriors and high-end building materials—required for the use of the Trump name.

"It's a hell of a formula," Mr. Trump says about his branding strategy. "The brand is so hot. I made millions of dollars, and I was able to skip this really bad market."

Many of his licensing deals have been successful. The Trump Tower at City Center in White Plains, in New York's suburban Westchester County, sold all 212 of its condo units in less than six months after sales began in 2004.

Foreign developers who have joined with Mr. Trump say his brand is untarnished in their countries.

In Pune, India—an automotive manufacturing city about 95 miles from the country's financial capital of Mumbai—Panchshil Realty is building two 23-story, glass-clad towers with the Trump name on them.

"Everyone wants to buy the best house. That's the mentality," says Sagar Chordia, a director with Panchshil. "Everybody knows Trump. People have seen the Trump Tower in New York. Everybody watches 'The Apprentice.' "

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